Printer and cartridge maker Epson is a step closer to completely barring third …

Epson is one step closer to closing the books on a case against third-party ink cartridge
manufacturers that make and sell products to work with Epson printers. The
company has won a preliminary ruling saying that 24 aftermarket print
cartridge manufacturers do indeed infringe on Epson's patents, and they face orders
that would bar them from selling the infringing products in the US.

Epson had filed a complaint with the US International Trade Commission in February of 2006 accusing the companies of manufacturing and selling ink cartridges that came too close to Epson's own cartridge designs. The company had begun to file federal lawsuits against the companies, and many of them decided to settle with Epson rather than fight the case.

During the trial conducted in January of this year, Judge Paul Luckern found that over 750 cartridges from various companies infringed on at least one of 11 patents owned by Epson. Upon issuing the preliminary ruling on March 30, Judge Luckern recommended that Epson file a General Exclusion Order and Cease and Desist Orders against the 24 companies listed in Epson's complaint. The companies accused of infringing on Epson's patents are located in the US, Germany, Korea, and China, and the orders would prevent those companies from importing and selling their products in the US.

"We are gratified that Judge Luckern upheld the validity and enforceability of Epson’s ink cartridge patents," said Epson's director of consumer supplies Elizabeth Leung in a statement. "These lawsuits were filed as part of Epson's worldwide efforts to protect the company from unfair competition. We urge manufacturers, distributors and retailers of ink cartridges to recognize this further validation of Epson’s patent rights and act accordingly. Resellers should be mindful that, in addition to the import restrictions that can be ordered by the ITC, patent infringements can result in very substantial compensatory damages in District Court actions. We will continue taking whatever action is necessary to protect Epson’s invaluable intellectual property rights."

If the ITC approves Judge Luckern's preliminary ruling, then Epson printer users will no longer be able to purchase low-priced alternative cartridges for their printers in the US. The ITC is scheduled to issue a final determination on the case on June 30, 2007.

A sign of things to come?

The prevailing business model in the printer manufacturing business has long been hinged on ink and toner sales, but manufacturers have seen their profits shrink as third parties move in to sell ink and toner products closer to their own manufacturing costs. In a rather high-profile case, Lexmark battled North Carolina-based Static Control Components (SCC) over the manufacture of printing components meant to lock-out third party providers. In that case, Lexmark had tried to use the DMCA to argue that SCC had infringed on Lexmark's intellectual property, but that approach failed.

Epson's approach has focused on patents and patent law, and so far it has been successful. In the federal court case, Epson accused its competitors of patent infringement primarily based on two patents: 7,008,053 and 7,011,397. Both patents cover minor technical innovations in the production of inkjet printer cartridges, and Epson has since piled on additional patents in an attempt to ensnare all of the companies manufacturing ink replacement products for its most recent printers. We suspect that this isn't the last time we'll see this tactic used, given its success.